Speaking to InvestorDaily’s sister brand, Money Management, Adam Roberts, Australian Ethical’s head of private markets, said this approach gives the firm a greater opportunity to align its investments with its ideology.
“When you think about public markets, it’s the ASX 200, that’s largely what indices are based around. On the private side, we invest here and globally and get greater opportunities to access those thematics and there are high-quality people we can work with in the US and Europe who can help attract deal flow for us to co-invest,” he said.
Roberts explained that Australian Ethical has moved away from investing through managed funds and is now taking a more hands-on approach to portfolio construction.
“Previously we would have invested in a managed fund that invests on our behalf, whereas today we want to be more thoughtful around our portfolio construction and have more control over where our capital is going.
“We try to stay close to our assets so we understand how they perform and can respond quickly if we see exciting opportunities where we think a business can grow or choose to pivot out of it if something isn’t working the way we hoped.”
Infrastructure a key focus
Australian Ethical currently has exposure to venture capital, growth equities, private equity, property and infrastructure, with Roberts highlighting infrastructure as the most commonly used private market investment.
“Infrastructure is more attractive to wholesale capital because they understand it and they use it. It has attractive characteristics where it is inflation-linked, regulated revenues, it has high barriers to entry, it is aligned with other thematics such as changing demographics and is a sector that people can understand,” he said.
In February last year, the firm launched an infrastructure debt fund in partnership with infrastructure specialist Infradebt. The fund, which is open to external capital, has already made 15 loans to renewable energy firms.
With increasing interest in private markets, Australian Ethical said it is now exploring new ways to help wholesale investors access these opportunities.
“We are seeing a lot of interest and feedback about private markets, so we are thinking about how can we provide a solution for wholesale capital in that space?” Roberts said.
“It’s not straightforward as it is very nuanced so we think our brand and our portfolio is appealing to people, so we are looking at what will work and how we can unlock that for them.”
Australian Ethical’s funds under management (FUM) expanded 27 per cent in the six months to 31 December to $13.26 billion, marking a new record high.
This, it said, was boosted by its acquisition of Altius Asset Management, which added $1.93 billion in FUM at the time of completion in September, as well as continuing positive organic net flows and investment performance of $680 million.
